CASE STUDY CLASSIFICATION OF THE NCI Len Inn is the accountant for Jack Trucks Ltd. This entity has an 80% holding in the entity Tyres‐R‐Us Ltd. Len is concerned that the consolidated financial statements prepared under AASB 10/IFRS 10 may be misleading. He believes that the NCI in Tyres‐R‐Us Ltd does not belong to the group and it should be treated as a liability, rather than as a part of consolidated equity. He therefore wants to prepare the consolidated financial statements showing the NCI in Tyres‐R‐Us Ltd under liabilities in the statement of financial position, and for the statement of profit and loss and other comprehensive income and the statement of changes in equity to show the profit numbers relating to the parent shareholders only. Required Discuss the differences that would arise in the consolidated financial statements if the NCI were classified as debt rather than equity, and the reasons the standard setters have chosen the equity classification of NCI in AASB 10/IFRS 10. CASE STUDY